IslamicFinance.de

The Islamic finance industry is seeking ways to safeguard deals against challenges to their religious permissibility. Sharjah-based Dana Gas declared it would not make payments on $700 million of sukuk because Islamic finance standards had changed since the instruments were issued. This raised concern across the Islamic finance industry that more companies could avoid redeeming sukuk by adopting the same argument as Dana. To try to avoid similar cases in future, investors may demand more detailed and restrictive language in sukuk documentation. Such language already exists for some sukuk, but it is not used consistently and is not standardised. Investors may also screen the groups of scholars who provide sharia endorsements for sukuk. The newly formed high sharia authority for Islamic banking and finance is expected to set rules and a general framework for Islamic finance governance in the United Arab Emirates.